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- 1. Chapter 2: Types of Retailers Joel Whelchel & Sarah Skinner
- 2. Overview Retailer Characteristics Retail Mix Food Retailers General Merchandise Services Retailing Services Vs. Merchandise Retailer Types of Ownership
- 3. Retailer Characteristics Convenience Shopping locally Benefits the community Internet Wal-Mart.com, Ebay.com Free shipping with in-store pick up Mobile Phones Reservations Quick and easy Location Catalogs Send to another address
- 4. Retail Mix Four Elements: Type of Merchandise Variety & Assortment Customer Service Price
- 5. Retail Mix Types of Merchandise: North American Industry Classification System Collects data on business activity in each country 6 digit classification Merchandise retailers: sectors 44 & 45 Most service retailers: sectors 71 & 72 17% of all US retail sales are for motor vehicles and parts. Department stores account for 7%.
- 6. Retail Mix Variety & Assortment/Services Offered The # of merchandise categories a retailer offers; Breadth. The # of different items offered in a merchandise category; Depth. SKU Store or specific item within Services: Display, credit/debit cards, parking, hours Scheels has specialists for each area Advantages/Disadvantages of breadth & depth Cheaper Costly to retailers & consumers
- 7. Food Retailers Supermarkets Conventional Limited Assortment Supercenters Warehouse Clubs Convenience Stores
- 8. Food Retailers Conventional Supermarket Limited- Assortment Supermarket Supercenter Warehouse Club Convenience Store % of Food 70-80 80-90 30-40 60 90 Size (sq. ft.) 35-40 7-10 160-200 100-150 3-5 SKUs (000) 30-40 1-1.5 100-150 20 2-3 Variety Avg. Narrow Broad Broad Narrow Assortment Avg. Shallow Deep Shallow Shallow Ambience Pleasant Minimal Avg. Minimal Avg. Service Modest Limited Limited Limited Limited Prices Avg. Lowest Low Low High Gross Margin (%) 20-22 10-12 15-18 12-15 25-30
- 9. Food Retailers Trends Supercenters/Warehouse Clubs Discount Stores Convenience Stores Fresh Merchandise Health/Organic Merchandise Ethnic Merchandise Private-Label Merchandise Improving Shopping Experience
- 10. Food Retailers Supermarkets: Conventional Large, self-service, groceries, health & beauty, general merchandise Perishables: account for 44% supermarket sales 30,000-40,000 SKUs Emphasize fresh perishables, target health- conscious/ethnic consumers, provide better value with private-label merchandise, & better shopping experiences. Offering organic, natural, fair-trade, ethnic, & private- label goods
- 11. Food Retailers Supermarkets cont’d: Limited-assortment/Extreme-value food retailers: 2,000 SKUs 1 or 2 brands, private-label Shipped on crates; no unloading No credit cards 40% lower prices
- 12. Food Retailers Supercenters Large, 185,000 sq. ft.., inconvenient to some Wal-Mart: 81% total supercenter sales Non-food items purchased on impulse Carry higher % of non-food, focused on dry goods Hypermarkets 100,000 to 300,000 sq. ft.. Food 60-70%, merchandise 30-40% Not common in the US, similar to supercenters Carry higher % of food, greater emphasis on fresh foods Warehouse Club 100,000 to 150,000 sq. ft.. Limited & irregular assortment of good & general merchandise Little service at low prices Costco, Sam’s Club Buy in bulk, 2 members (Wholesale & Individual)
- 13. Food Retailers Convenience Stores 3,000 to 5,000 sq. ft.. Fast services Limited varieties, higher prices Offering more fresh food, casual restaurant foods, new services Opening smaller stores closer to schools, work places, & airports
- 14. General Merchandise Department Stores Specialty Stores Category Specialists Home Improvement Centers Discount Stores Drugstores Off-Price retailers Extreme Value Retailers
- 16. General Merchandise Department Stores Broad variety & deep assortment, distinct departments Major departments: Women’s, Men’s, Children’s apparel, cosmetics, home furnishings, kitchenware, small appliances. Specific selling space Major brands Multi-channel retailing Better relationships with their key customers
- 17. General Merchandise Three Tiers of Department Stores: First Tier: Upscale, high fashion chains with exclusive designer merchandise and excellent customer service Nordstrom, Neiman Marcus, Saks Second Tier: Retailers sell more modestly priced merchandise with less customer service Macy’s, Dillards Third Tier: Value oriented caters to more price conscious customer JCPenney, Sears, Kohl’s
- 18. General Merchandise Full-Line Discount Broad variety, limited service, low prices Offer both Private-label & national brands Wal-Mart alone is 67% of discount store retail sales Competition from category specialists that focus on a single category of merchandise. Staples, Best Buy, Lowes.
- 19. General Merchandise Specialty Stores Limited number of merchandise with a high level of service Tailor in retail strategy. Offer deep but narrow assortments.
- 20. General Merchandise Drugstores Concentrate on health and personal grooming Prescriptions 70% sales Category Specialists Offer narrow but deep assortment of merchandise Self-service Category killers Toys R’ Us, Borders, Cabela’s, PetSmart
- 21. General Merchandise Extreme-Value Discount, limited assortment, low price Target low-income consumers Family Dollar Off-Price Inconsistent assortment of brand-name merchandise at significant discount TJ Maxx, Overstock.com 20-60% lower prices Outlet stores Closeouts Irregulars
- 22. Services Retailing Firms that primarily sell services rather than merchandise.
- 24. Services Vs. Merchandise Retailers Intangibility Problems in evaluating service quality Performance of service provider Simultaneous Production and Consumption Importance of service provider Perishability No inventory, must fill capacity Inconsistency Importance of HR management
- 25. Types of Ownership Independent, Single-Store Establishment Corporate Retail chains Franchises
- 26. Types of Ownerships Independent, Single-Store Establishment Owner managed Very flexible Wholesale-sponsored voluntary cooperative group Organization operated by a wholesaler offering a merchandising program to small, independent retailers on a voluntary basis. Provide advice on store design/layout, site selection, bookkeeping & inventory management systems, an employee training programs.
- 27. Types of Ownership Corporate Retail Chains Operates multiple chain units Ranges in size Franchising Contractual agreement between franchisor and franchisee 40% of all US retail sales are supported by the franchisor Combines advantages of owner-managed businesses with the efficiencies of centralized decision making. Franchisees are more motivated to make their stores successful because they receive the profits Franchisor is motivated to develop new products and systems because it receives royalty on sales.
- 28. Wiki Group 3 Assignment 1 Types of Ownership Compare the types of ownership and make a list of advantages and disadvantages of: Independent, Single Store Establishments Examples: Shangri-La Clothing, Black Hills Bagels Corporate Retail Chains Examples: Target, Wal-Mart, Safeway Franchising Examples: McDonald’s, Subway, Ace Hardware Use a digital story telling method or multimedia to illustrate the advantages & disadvantages. (Blabberize, Comic Life, Prezi…) Post to Wiki!
- 29. Wiki Groups 4 & 5 Assignment 2 Visit 2 different general merchandise retailers and compare their characteristics such as retail mix, merchandise or services provides, the variety and assortment, level of customer service, and price. Choose from any of the three: Department Stores (Ex. Macy’s & JCPenny) Full-Line Discount Stores (Ex. Best Buy & Bed Bath & Beyond) Specialty Stores (Ex. Hot Topic & Claire’s) Use a digital story telling method or multimedia (Blabberize, Comic Life, Prezi…) Post to Wiki!
- 30. Wiki Groups 6 & 7 Assignment 3 Compare and contrast the intangibility, simultaneous production and consumption, perishability, and inconsistency between a service retailer and merchandise retailer. Example: Supermarkets and Restaurants Use a digital story method or multimedia to post your findings. (Blabberize, Comic Life, Prezi…) Post to Wiki! Group 2 choose any one of the three assignments!